Thursday, January 12, 2012

Shale Oil & Gas: The Development That Changes Everything

MIT News, a journal of the Massachusetts Institute of Technology, reports on a new MIT study that confirms shale gas will make “a big difference” in energy prices in coming decades. Without shale gas, oil and gas prices would rise fivefold by 2050; with shale gas, they would only double. The study concludes that shale gas would moderate energy prices, provide “flexibility” in cutting carbon emissions, stimulate the U.S. economy – and “suppresses the development of renewable [energies].” The EIA, incidentally, says $4 (U.S.) worth of natural gas now buys as much energy as $25 worth of oil. (The MIT study concludes that the environmental risks in shale gas extraction have been “overstated.”) _Globe&Mail

John Deutch, MIT energy expert and chair of a U.S. Department of Energy panel studying the shale industry, says shale gas has created 750,000 jobs with many more to come – especially in Pennsylvania and Ohio, two states that will play a significant role in the 2012 president election. “Over the last couple of years,” Prof. Deutch said, “I’ve realized that what’s happening with unconventional natural gas [shale] is the biggest energy story … in the 40-plus years that I’ve watched energy development in this country.”

According to the Dziennik Gazeta Prawna daily newspaper, Poland’s state-controlled gas company expects to make its first deliveries of domestic shale gas in the second half of 2012. Up to 3,500 customers will be supplied with gas at a lower price than Poland now pays for the gas it imports from Russia. Poland regards shale gas production as a milestone in its quest for energy self-sufficiency.

...The Daily Telegraph reports that Total SA, France’s biggest oil and gas company, will pay $2.3-billion for a 25-per-cent stake in Chesapeake Energy’s shale deposit in Ohio; and China Petroleum and Chemical Corp. (Sinopec), China’s largest (and state-owned) energy company, will invest $2.2-billion for an interest in five oil and natural gas fields under development by Devon Energy. The report says U.S., European, Chinese and Indian energy companies are “scrambling” to gain access to vast U.S. shale gas deposits.

This was a good day’s work. Good days of this kind are occurring more and more often. In the first two weeks of January, huge fossil fuel discoveries have been confirmed around the world – including in Brazil, India and Cyprus (where Houston-based Noble Energy confirmed a fifth large gas discovery). Cyprus declared that these finds would, by themselves, “make a substantial contribution to energy security in the EU.” With every good day’s work, the world moves a little closer to energy independence – for almost everyone. _Globe&Mail

Huge tight gas fields have been discovered from China to India to Europe to South America to the Eastern Mediterranean. The vast volumes of gas discovered will overturn conventional markets and force oil & gas dictatorships such as Russia, Iran, Venezuela, etc. to rethink their global and domestic political strategies, as income from hydrocarbon sales begins to decline.

the WSJ is reporting that oil companies are just flaring gas off (the gas being a byproduct of oil exploration). There is no more storage and pipeline capacity for the gas. Plus, the price just took another dive.

I am curious as to why there hasn't been a lot more interest into GTL for the continental United States.

Westlake: Governor Bobby Jindal and Sasol New Business Development Managing Director Ernst Oberholster announced the South African company has selected Calcasieu Parish as the location for a potential gas-to-liquids (GTL) complex that would entail a capital investment of approximately $8-10 billion and produce direct employment of approximately 850 jobs with average salaries of about $89,000, not including benefits.

LED estimates that the project also would result in approximately 4,000 indirect jobs, which means the total impact of the project would be nearly 5,000 new jobs in Southwest Louisiana. Additionally, at full production capacity, the facility would consume approximately 305 billion standard cubic feet of natural gas per year; which would represent roughly $1.3-1.5 billion per year in natural gas purchases at current prices, and accordingly, Sasol’s proposed GTL complex would provide a huge new source of demand for the Haynesville Shale and other natural gas plays in Louisiana.

Governor Jindal said, “Sasol has selected Calcasieu Parish as their preferred location in the U.S. for one of the largest industrial projects in Louisiana history. This is great news for Southwest Louisiana and our entire state. Not only would this project result in nearly 5,000 new jobs, but it also would represent a huge new source of demand for natural gas in Louisiana, which would benefit the Haynesville Shale and other natural gas plays here. For nearly four years, we have made economic development our top priority so that we could put Louisiana in a position to secure projects like this one that would provide 850 jobs with salaries averaging $89,000, plus benefits. Without question, the Haynesville Shale and other unconventional natural gas plays are transforming the energy economy in the U.S., and we are positioning Louisiana to be one of the chief beneficiaries of that transformation.”

WW22: Although I was once sympathetic to the peak oil argument, I never studied any particular practitioners of the genre.

As for EROEI, once cheap abundant high quality process heat from gas-cooled nuclear reactors (particularly next gen SMRs) comes available, the energetics will be favourable for shale oil & gas, kerogens to liquids, bitumens to liquids, gas to liquids, coal to liquids, methane hydrate recovery and conversion, and biomass to liquids or biomass to "green coal."

HILN: Sasol is definitely building GTL in Canada, and probably will also do so in Louisiana -- once the Obama administration is given the boot and can no longer enforce its agenda of energy starvation on the dimwitted populace that put it in power.